Firms 'can spread the cost of rates hike'

Published on Saturday 4 April 2009 14:32

FIRMS in Scotland hit with a hike in business rates bills will be able to spread the extra cost over three years, ministers will announce this week.

The move by Finance Secretary John Swinney follows a similar concession for firms in England unveiled last week by the Chancellor Alistair Darling.

Business rates were hiked to 5% from 2% last week in line with inflation, as defined by last September's increase in the retail prices index. Amid anger that the increase would cripple small companies, Darling announced a U-turn last Tuesday, when he said firms in England could pay 2% extra this year and spread the remaining 3% over the next two years.

"This will help businesses to smooth their rates payments over the next few years to deal with the effects of the recent spike in inflation," Darling said.

Business groups, including the British Retail Consortium, hailed the surprise decision as a "victory".

This week's move by Swinney means Scottish firms can spread the cost of the increase over three years to reduce pressure on their cash flow.

Swinney said: "We will work with local government to make allowances for businesses to spread the cost of the latest annual increase in rates over three years. This will allow businesses who wish to take advantage of the new arrangements to effectively stagger the increase in rates for this year, meaning vital breathing space when companies need it most."

Swinney added that tens of thousands of small firms were already paying no business rates at all through the Scottish Government's small business bonus scheme.

The announcement from the Scottish Government comes days after Iain McMillan, director of CBI Scotland, wrote to Swinney calling for a level playing field on non-domestic rates in Scotland and England.

McMillan had demanded to know whether Darling's decision would be replicated in Scotland.